Is it too late to buy Alphabet stock?

It’s hard to imagine that brands like Android, YouTube, Google, and even Fitbit are owned by the same company. Each of them is a subsidiary Alphabet (GOOGLE 0.86%) (GOOG 0.89%)making the company one of the most successful organizations in history. The stock hit a new all-time high last week, surpassing $190 per share. Meanwhile, recent events suggest that Alphabet still has plenty of room to grow over the next decade and beyond.

Alphabet has benefited from a rally in the tech industry, with its shares up about 57% since last July. Wall Street has become bullish on companies pushing the boundaries of artificial intelligence (AI), and Alphabet is one of the biggest names in the space. Google has been an AI-first company since 2016, driving innovation at its DeepMind AI research lab.

Additionally, Alphabet has a dominant position in the digital advertising market, which translates into significant financial growth.

Here’s why it’s not too late to buy Alphabet stock – there’s a real urgency now.

Using its advertising advantage to elevate its position in the technology industry

Alphabet has many products under its umbrella. These include productivity software, a search engine, video sharing, a leading smartphone operating system, and more. However, when looking at profits alone, the company is primarily a digital advertising company. Alphabet has strategically leveraged the massive popularity of its various platforms to become an advertising giant, responsible for a leading 24% of the market.

In fact, advertising from its various services brought in 87% of the company’s revenue in the first quarter of 2024, up 14% from the previous year and totaling over $70 billion. Despite its many years in the industry, advertising remains a very profitable business for Alphabet, as operating income from Google Service increased 28% year over year in the first quarter of 2024.

Alphabet’s dominant position in advertising and long list of strong brands have given it the financial resources to expand its business. The company has ramped up its AI efforts over the past year, expanding its library of generative tools on Google Cloud and launching its most advanced AI model, Gemini.

Despite Alphabet’s many years in the AI ​​space, it’s still early days for its journey in this space, given its potential. The company has an opportunity to pursue a similar strategy to advertising, using its popular services to promote its AI technology. In this way, Alphabet can strengthen its business by building Google into a true competitor to OpenAI’s ChatGPT, continuing to build out Google Cloud, adding generative capabilities to its productivity platforms, and offering more effective advertising.

Providing big financial benefits

Alphabet has spent billions on AI over the past year, yet the company has still made significant financial gains. The recent growth illustrates the long-term robustness of its business and its ability to keep up with its competitors in the years to come.

In the first quarter of 2024, Alphabet’s total revenue rose 15% year over year to $81 billion, beating analysts’ forecasts by almost $2 billion. But the most impressive growth came in the form of operating income, which rose 46% year over year to more than $25 billion. The increase was driven by a significant increase in Google Services profits. Meanwhile, Google Cloud delivered nearly five times more operating income than the previous year.

Data by YCharts.

The chart above shows that Alphabet has achieved impressive financial growth over the past five years. The company is on a promising growth trajectory, making the stock simply too good to pass up right now.

Alphabet is one of the best opportunities in the technology industry

Alphabet’s 57% share price gain over the past year has outpaced many of its peers, including Amazon, MicrosoftAND Apple. However, the chart below shows that Google stock still offers more value than any of its competitors.

Data by YCharts.

The above data compares the valuations of some of the most well-known tech companies using their price-to-earnings (P/E) ratios. P/E is a helpful metric calculated by dividing a company’s current share price by its earnings per share. In this case, Alphabet’s significantly lower P/E makes it one of the best “Big Tech” opportunities.

Given Alphabet’s significant financial growth and its potential in the AI ​​space, it’s not too late to invest in the company and benefit from its growth in the long term.

Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, a subsidiary of Amazon, is a member of The Motley Fool’s board of directors. Dani Cook has no ownership interest in any of the stocks mentioned. The Motley Fool owns shares in and recommends Alphabet, Amazon, Apple, and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 call options on Microsoft and short January 2026 $405 call options on Microsoft. The Motley Fool has a disclosure policy.